In physics, inertia or a tendency to do nothing and remaining unchanged is a well recorded phenomenon. In us humans though, inertia comes cloaked in fancy excuses making it’s recognition that much more difficult. Investing is one such process in which most of us choose to hug the status quo by coming up with a few excuses as to why it does not make sense. Today, let’s talk about 5 such excuses that you must ditch and start investing now.
1. Finance and investing is complicated
While in no way underplaying the complexity of the domain, I believe we choose to let it intimidate us. In life, most of us undertake a lot of complicated activities that other lay people would run away from. Think about it. If you are a software engineer saying no to investing, there would be enough and more fund managers befuddled by the simplest code that you could otherwise write.
If you decide to put in some focus and energy into an important domain of life, essentially investing, gradually it will begin to unravel for you. As you begin to understand the basics, you might wonder why you ignored it for so long. This blog too is a good place to start and you could explore some of the previous posts for a better understanding.
2. It is too risky
I would be the first one to acknowledge the fact that investments come with their fair share of risk. However, so many of our decisions in life too entail a risk, be it a new business, marriage or even a daily commute.
When it comes to personal finance, you expose yourself to a far more dangerous risk when you don’t invest. That is the risk of inflation. Investing has a two-fold purpose of growing money and protecting from the erosion effects of inflation. If you choose to not invest, instead of protecting your money, you are letting the real value of that pile of money get smaller and smaller with each passing year.
3. I have no savings to invest
With the spread of consumerism in India, there are innumerable options to spend our hard earned money. In such a case, it is easier to spend it all rather than save or invest.
Saving is a mindset. If you decide to allocate an amount to saving or investing every month, then psychologically you will be well aware that the remaining money is your playing field when it comes to discretionary spending. Instead of saving the money left after spending, invert the equation to spend the money left after saving. Once you start doing that, gradually the habit of saving is only going to become more deeply entrenched over time.
4. I don’t have time to invest
Did you know that one famous Fidelity study is supposed to have concluded that dead people make the best investors in terms of returns? While the study is still hotly contested, there is undisputable evidence that inactivity on investment accounts is directly correlated to higher returns.
It might seem more exciting to watch your colleagues who are continuously clued in to the markets with their hot fingers ready to pull the trigger at the hint of a news. However, over the years, evidence suggests investing in a portfolio of a few well-diversified low-cost long-proven mutual funds and sitting tight is what investing is all about.
If you decide to do investing the right way, then it might take you some time initially to set up your investing plan. After that, a review at regular intervals, like quarterly is good enough. That much time, I believe, is well worth the returns investing promises over a long run.
5. My financial goals are too far
Life is like a rear view mirror – Events in the future are much closer than they appear. You might think that your monthly salary works well enough for your current needs and the bigger financial goals like retirement are far away into the future.
However, one of the best things you could do for your investing habit is to start early. When you start early, you are in a good place to make the most of the magic of compounding and to get the highest probability of wealth creation. Whether your goals are in sight or far away in the future, start investing and stay invested to have a smoother ride even with volatile assets like equity.
As you can see, no excuse to stay away from investing, stands the light of reason. So, start small and stay long to see the benefits of investing build up over time. If there is still some other doubt in your mind which keeps you away from it, put it down in the comments and let’s talk about it.